THE STAGGERING COST OF CLIMATE ALARMISM (1)

Developing nations need a 600-billion-dollar "Marshall Plan" annually to tackle climate change with support from rich nations on a scale not seen outside wartime recovery, a UN report said Tuesday. The World Economic and Social Survey called for a "Global Sustainable New Deal" to overcome the "woefully inadequate" estimate of 21 billion dollars currently set aside internationally to adapt to and cope with climate change.

Touching on a core stumbling block in global climate talks, the report said that poor nations needed a huge investment programme from rich nations to shift to clean energy, and to adapt to the weather changes and damage wrought by global warming. The transformation would require "a level of international support and solidarity rarely mustered outside a wartime setting," according to the survey by the UN's department of economic and social affairs. "What we're arguing for given the kind of money we're talking about is a new Marshall Plan to tackle climate change and development," said author Richard Kozul-Wright.

"The ballpark figure in this report is one percent of world GDP, something in the order currently of 500 billion to 600 billion dollars (419 billion euros) annually is what developing countries will need in terms of international support to make this kind of shift sooner rather than later," the UN economist told journalists.

World leaders will meet in the Danish capital Copenhagen in December in a bid to seal a new international accord against climate change, aimed primarily at setting new emissions cuts and drawing developing nations into the deal. But industralised, emerging and developing nations are at loggerheads in the negotiations, including over the issue of additional funding to help poor countries mitigate and adapt to global warming.

The latest UN figure is well above previous estimates. "The kind of adjustments required have been seriously underestimated," said Kozul-Wright, calling for more "leadership" from high polluting rich nations and "much more frank and open discussions about burden sharing at the international level." The report acknowledged that the required public investment push for climate action was "substantial and daunting," but pointed to the trillion dollar support given to banks and the financial system over the past year. "This is a systemic threat," said the senior UN economist.

The report warned that incremental, market-based solutions such as emissions trading were not enough. Instead they needed to find a way to pursue high economic growth as well as low emissions simultaneously, rather than to stifle industrial activity in order to cut energy use. Investment within the next decade followed by rapid growth would sustain a wholesale transition to clean energy in poor nations and gradually help them to stand alone in coping with changing weather patterns, it added.

The report endorsed by UN Secretary General Ban Ki-moon said: "The idea of freezing the current level of global inequality over the next half century or more, as the world goes about trying to solve the climate problem, is economically, politically and ethically unacceptable."

It pointed out that while the world needed to cut greenhouse gas emissions by 50 to 80 percent over 1990 levels by 2050, the energy generating capacity of developing countries was projected to be double that of their developed counterparts. The report firmly laid the burden for current cuts on wealthy nations, noting that carbon emissions from China's booming economy were equivalent to those of the United States before World War I.

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THE STAGGERING COST OF CLIMATE ALARMISM (2)

The cost of reducing China's total greenhouse gas emissions is likely to reach $438bn a year within 20 years, and developed economies will have to bear much of that cost, according to a group of Beijing's leading climate economists. The figure, equivalent to about 7.5 per cent of China's estimated gross domestic product in 2030, is likely to be deployed to support Beijing's argument at December's climate change summit in Copenhagen that industrialised nations must share the cost of cutting emissions in developing countries.

The analysis suggests that China must substantially ramp up its spending on curbing greenhouse gases in the next 20 years, or face enormous bills for cutting emissions from 2030.

Economic studies such as the 2006 review of the costs of climate change by Lord Stern, and a host of subsequent reports, have found that early action on emissions is cheapest, and that deferring curbs to emissions leads to far greater costs in the medium term.

Zou Ji, head of the department of environmental economics and management at the People's University in Beijing, which conducted the study, told the Financial Times that China could be expected to pay for measures to slow the growth of emissions. But the cost of doing more than that should be shared by the international community because it was aimed at the "global public good" of saving the planet, he said.

In May, Beijing said developed countries should spend 0.5 to 1 per cent of annual GDP to help poorer countries cut emissions - a contribution that would cost the Group of Eight developed economies more than $300bn (€210bn, £185bn) a year. The much larger figure of $438bn assumes that China continues its current measures to improve energy efficiency and to increase the use of renewable fuels.

China has so far resisted committing itself to any cap on its emissions, citing economic development needs while holding out for pledges of financial support for cuts. Su Wei, director-general of the climate change department at China's National Development and Reform Commission, told the FT last month that the country's emissions would peak by 2050.

Professor Zou said he believed that a proposal to cut total global emissions by half by 2050 would be impossible to achieve technologically. His group's study estimated the cost of more aggressive measures to curtail Chinese emissions growth after 2030 at $284bn a year through to 2050 and $508bn annually after that.

Actually reducing the level of emissions after 2030 would cost an additional $154bn a year, according to results from the study seen by the FT. A peak in 2030 was "technologically feasible but financially very challenging," said Prof Zou. The study bases its calculations on 62 technologies considered crucial by the researchers to cutting emissions, and argues that for many of these technologies, China lacks key intellectual property rights or the research capacity to develop them further as quickly as can be done in economically advanced countries.

Prof Zou said the cost of cutting emissions would rise over time, and researchers worked on the assumption that real cuts in Chinese emissions would come from new technologies that would start to move beyond the experimental stage only around 2030. The People's University scholars also assumed higher rates of inflation than used in other studies.

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THE SOCIALISM IN THE SOCIAL COST OF CARBON

by Jim Manzi -- who points out that even assuming that CO2 is harmful, the proposed response is still arbitrary and irrational

Burning fossil fuels creates so-called “external costs” because it contributes to ongoing climate change. This is a fancy way of saying that when I burn such fuels, other people become worse off than they would be otherwise, because I have increased the odds that they will suffer damages from anthropogenic global warming (AGW). This both seems unfair, and means that we will burn more fossil fuels than would seem to be socially optimal. It seems obvious to many people that we should therefore tax fossil fuels in order to prevent this. This is termed a Pigovian tax, and is sometimes referred to as “internalizing the externality”, or taxing fossil fuels to reflect the “social cost of carbon”.

It’s not so obvious to me that this is good idea. To implement it would be little more than a re-labeling of the kind of comprehensive planning that Hayek attacked sixty years ago. Here’s why.

Start with the point that we tax an activity, not a substance. Let’s take the example of burning a gallon of gasoline by driving to work rather than riding your bike. This action creates social cost in the form of AGW. But it also creates other social costs, such as, for example, local air pollution, congestion, noise and increased risk of accidents for others.

Why would we privilege a unit of social cost created by AGW over that same unit of social cost created by any of these other effects? If I die from cancer because I inhaled some of your fumes or I die from flooding because of increased global temperatures, I am in each case equally dead. But it also creates social benefits. You spend less time travelling, get to work earlier and produce more output that day; because you can not capture all of the social utility of your labor, this creates incremental social benefit.

You also have more time at home, and use this time with your kids to improve their educational outcomes, which creates social utility in later years. And so on, ad infinitum. In order to set the tax, we don’t just need to know the costs created by AGW (which is a pretty tall order), but rather all of the social costs and benefits created by the activity, which is far harder.

And what is typically assumed is that we only need to know the marginal social costs of one more gallon of gasoline; but really if we are discussing a tax sufficient to change the structure of the world energy economy over many decades to head off AGW, then we need to know something a lot closer to the average social costs of a gallon of petroleum. (Or more precisely, the marginal costs of very large changes). [...]

The only real argument for rapid, aggressive emissions abatement boils down to the point that you can’t prove a negative. If it turns out that even the outer edge of the probability distribution of our predictions for global-warming impacts is enormously conservative, and disaster looms if we don't change our ways radically and this instant, then we really should start shutting down power plants and confiscating cars tomorrow morning. We have no good evidence that such a disaster scenario is imminent, but nobody can conceivably prove it to be impossible. Once you get past the table-pounding, any rationale for rapid emissions abatement that confronts the facts in evidence is really a more or less sophisticated restatement of the precautionary principle: the somewhat grandiosely named idea that the downside possibilities are so bad that we should pay almost any price to avoid almost any chance of their occurrence.

But if you want to use this rationale to justify large economic costs, what non-arbitrary stopping condition will you choose for how much we should limit emissions? Assume for the moment that we could have a perfectly implemented global carbon tax. If we introduced a tax high enough to keep atmospheric carbon concentration to no more than 1.5x its current level (assuming we could get the whole world to go along), we would expect to spend about $17 trillion more than the benefits that we would achieve in the expected case. That’s a heck of an insurance premium for an event so low-probability that it is literally outside of a probability distribution. Of course, I can find scientists who say that level of atmospheric carbon dioxide is too dangerous. Al Gore has a more aggressive proposal that if implemented through an optimal carbon tax (again, assuming we can get the whole word to go along) would cost more like $23 trillion in excess of benefits in the expected case. Of course, this wouldn't eliminate all uncertainty, and I can find scientists who say we need to reduce emissions even faster. Once we leave the world of odds and handicapping and enter the world of the precautionary principle, there is really no principled stopping point. We would be chasing an endlessly receding horizon of zero risk.

We are left, then, wandering in exactly the wilderness of mirrors that I described earlier. There is no analytical basis on which we can really “put a price on carbon”. It becomes pure power politics. This isn’t just theory. Consider seriously the evidence of what really happened in the Waxman-Markey debate. That wasn’t random. Even more, consider how such taxes have really been set in the UK. Matthew Sinclair has a recent paper in the journal Energy & Environment in which he compares the total green taxes paid by Britons to the estimates of external AGW costs created by them according to various well-known and authoritative sources such as the IPCC, Nordhaus, Tol and DEFRA. Take the example of driving. According to this paper, Britons currently pay motoring taxes (net of road construction and maintenance) that are somewhere between 5 and 50 times the AGW externalities that they impose. The paper argues that massively excess green taxes are paid economy-wide.

I yield to few men in my admiration for Hayek and his ideas. His prediction that the welfare state would lead to serfdom, however, has (thus far) not been correct. I don’t think that a carbon tax will be the one event that will push the free world into socialist slavery. But it does seem clear that the same dynamics he described decades ago have re-emerged, simply with a different theoretical justification. The same problems with planning that he highlighted will also be present now.

Taxing carbon to reflect its social costs seems like a common sense idea. Unfortunately, it simply provides another excuse to politicians to raise taxes and exert more power over us.

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BRITAIN'S POWERLESS GREEN FUTURE

The UK could be rationing electricity within 8 years because demand for power is forecast to outstrip supply. The British government committed the nation to its Low Carbon Transition Plan in July, an idea that hopes wind and solar can produce enough electricity to power the entire country. Renewable energy is a green dream that will turn into a nightmare for families facing sudden power cuts or scheduled brown-outs.

In the 21st century, the idea that a nation cannot provide enough power for its people and industries should be unthinkable. There is no coal shortage, no oil shortage and no Uranium shortage. The only shortage is plants that convert these fuels into power. But why?

Greens have played a key role in dePowering the UK, Greenpeace scofflaws at Kingsnorth illustrate the radical scaremongering that made the idea of building new generating capacity a political nightmare. Eco-radicals are proud of their drive to deprive people of affordable energy, witness the Sierra Club in the USA and how they brag about the 100 power stations they ‘prevented‘.

The perfect storm of a spineless political class and a somnolent public faced with aggressive green lobby groups has brought the UK to a point where it is a country without an energy future. No one listens to voices of reason, preferring to pretend that renewable energy can fill the gap and ignoring that ‘green’ alternatives require the industrialization of the open countryside:

… the land area occupied by wind farms would be nearly 10 percent of the country, or roughly the size of Wales. The area occupied by desert solar power stations — in the case of Britain, they would have to be connected by long-distance power lines — would be five times the size of London. The 50 nuclear power stations required would occupy a more modest 50 square kilometers.

What will happen in 8 years when the lights start to go out across Britain? Here’s two predictions that will drive greens nuts, because the unintended consequences of their blinkered knee-jerk activism will result in bad outcomes for the environment:

Unlike the 1970’s, small generators are available and affordable. Families and small businesses that can afford them will buy their own rather than lose a freezer full of meat or their Internet connection. Small generators run on gas and are pretty inefficient, inconveniently.

The government of the day will panic and will build new generation capacity as cheaply and quickly as it can, which means new coal powered plants, the very thing that Greenpeace and other eco-naifs wished to avoid. (A potential problem for green radicals is that any attempts to block urgent new builds will likely be frowned upon by a public that want their lights on, cutting off their essential cover of public support.)

British people are waking up to a major problem that threatens to negatively impact their everyday lives. Politicians will pay a heavy price for their part in the fiasco, the only question is whether there will be a backlash against the idiot greens that pushed the country to the brink and perhaps over it.

Whatever happens, the situation in Britain is a canary in the coal mine for other countries blindly following the green path. If you live in the USA, Canada, Australia or any other country where carbon has been demonized by eco-hysterics, this could happen to you. Get involved and stop the rot, before your lights go out.

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Cap-and-trade can’t bridge gap between unions and enviros

Inspired by the speed and spending of the Apollo moon landing, the Apollo Alliance — a coalition of community organizers, environmentalists and big labor — is aggressively pushing President Barack Obama’s plan to regulate carbon emissions through cap-and-trade. If a recent meeting of labor and environmentalists is any indication, however, cap-and-trade may end up in a disaster more reminiscent of the Apollo 13 mission than the triumphant Apollo 11 landing.

Earlier this month, the AFL-CIO and its Washington state affiliate hosted a conference on the proposal in Wenatchee, Wash. Despite labor’s seat at the table, Bob Baugh, executive director of the AFL-CIO Industrial Union Council, conceded that cap-and-trade posed a serious threat to workers, especially labor members in energy-intensive industries.

Baugh’s right. According to a recent report by the Heritage Foundation, Waxman-Markey would cost millions of jobs and would increase unemployment levels for every year: 1.9 million fewer jobs in 2012, and an average of 1.14 million fewer jobs from 2012 through 2035. Those industries most affected would include manufacturing, glass, plastic and rubber-product production, and the fabricated-metal industries — all heavily unionized sectors.

Under cap-and-trade, industries would be forced to pay for expensive carbon credits or face massive fines. Some manufacturers would shut down facilities to fit under the cap or to seek a profit from selling their extra carbon credits. Other industries will simply relocate facilities, and the jobs that come with them, overseas.

Proponents of cap-and-trade refer to these job and industry losses as “leakage,” and concede there is no real answer for the problem, barring an international commitment from developing nations, which currently seems unlikely. According to Baugh, the AFL-CIO is demanding “border adjustments,” or “taxing the hell out of” every product that comes into the country, in order to even the playing field.

The Obama administration, which initially hinted at including such measures in order to gain union support, is now backing away under pressure from Canada and other U.S. trading partners. Obama also dashed hopes by big labor that developing nations would also face restrictive caps on emissions, stating that now “is not the time” to include countries like China and India. Baugh called failure to include developing nations under an international cap and border adjustments “a deal breaker” for trade unions, and warned that it was “hard enough” keeping local unions on board.

A recent Pew Research Center poll explains why. Americans’ primary concern is the economy and keeping jobs. Climate change is dead last on a list of 30 issues.

Joel Merkel, legislative counsel for Sen. Maria Cantwell, D-Wash., says the senator is leaning against supporting Waxman-Markey because she worries about the federal government “picking winners and losers” among industries. Merkel told the conference that Cantwell didn’t believe the bill that passed the House had any chance of passing in the Senate. Cap-and-trade is expected to generate billions of dollars, and Merkel explained that the only way the House was able to narrowly pass the bill was by promising “slices of the cap-and-trade pie” to particular industries in specific districts.

Senators, who represent states with multiple, diverse industries, do not want to be put in the position of helping some workers, while devastating others.

The economic and political realities of job leakage may soon have many cap-and-trade proponents in the Obama administration and the Apollo Alliance making the same assessment.

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China's Dongtan: the eco-city that never was

China’s big, impractical eco-city was all greenwash but it fooled lots of people for a long time

It was nice while it lasted, but now, it seems, the dream is over. The long-awaited, much-feted eco-city of Dongtan – described by environmental campaigner, Herbert Girardet as ‘the world’s first eco-city’ – has bitten the dust. After four years of presentations, proposals and puff, the universal praise has proven to be a little premature.

Dongtan, a new city development (three quarters the size of Manhattan Island) was to have been built on Chongming Island, near Shanghai, in the Yangtze River Delta. The first phase, comprising a city of 25,000 people, was due to have opened for the Shanghai Expo in 2010. By 2030 it was intended to house 500,000 residents. In Western terms, this sort of ambition is impressive, but in terms of China’s own plans to create a further 20 cities a year over the next 20 years, Dongtan was small fry. But, of course, an eco-city is not meant to be intrusive.

Dongtan has been variously credited for its planned zero-carbon footprint, encouragement of biodiversity, low car-usage, and low-consumption ideals. Peter Head, director of the engineering firm Arup, which was in charge of the project, said: ‘It is no gimmick. It is being led at the highest levels of the Chinese government. They are very committed to developing a new paradigm of economic development.’ (1) It was claimed that while ‘Shanghai has a typical ecological footprint of 5.8 global hectares per person… Dongtan eco-city will be 2.6’. Dongtan had been feted for so long that it is remarkable to some people to learn that it hasn’t already been built. It’s even more incredible to learn that it probably never will be.

In five years, practically nothing constructive has happened. The site has been cleared, the farmers and peasants moved off the land, and large areas prepared – but, as one observer puts it, ‘no construction has occurred there – indeed it’s gone backwards, as a visitor centre previously built is now shut’. All references to it have been removed from both the Shanghai Expo’s website as well as Arup’s.

Admittedly, a multi-million dollar bridge from the island to Shanghai is nearing completion, which ought to open up the Dongtan region for development, but fingers are being pointed at a range of suspects for the collapse of the overall project: the corruption of local politicians, the use of challenging technologies, lapsed planning permissions, or the greed of major international consultancies that were riding in on the Chinese urban goldrush with little regard for practical niceties.

There are undoubtedly elements of truth in all of these claims, but why did no one spot that nothing was happening? The simple fact is that nobody ever questioned the hype.

Engineering company Arup was contracted in August 2005 by Shanghai Industrial Investment Corporation (SIIC) to become the lead consultant for the design and masterplan of Dongtan. Since the initial sketches, the environmental PR machine has kicked in. Small-scale, computer-generated bird’s eye images of the eco-city proposals featured in practically every architecture magazine, and Arup found itself the centre of an eco-renaissance of urban sustainability. As Arup says, there have been many ‘collaboration opportunities for UK academics and Chinese researchers arising from Arup’s eco-city projects in China’.

The UK’s New Statesman described how ‘all housing will be within seven minutes’ walk of public transport. Most citizens will work within the city, which will produce sufficient electricity and heat for its own use, entirely from renewable sources. There will be no emissions from vehicles. Food will be produced on the island’ (2). The striking thing is that while everyone seemed to love this radical urban development, nobody ever questioned the layout: the design, the form, the architecture, or even the reality. They were all too busy promoting the carbon neutral dream.

In the course of five years’ promotional editorial for this project, you will be hard pressed to find one critical assessment of the project, and, I would wager, any negative articles at all. The mainstream and architectural press have a lot to answer for in blindly accepting the hype without asking the most basic questions. But given that the prefix ‘eco’ tends to provide immunity from criticism, the Dongtan bandwagon became unassailable. Simon Foxall of The Edge – a forum set up to stimulate public interest in policy questions that affect the built environment – summed up the hopes embodied in the scheme. ‘Dongtan’, he said, ‘is not a “thing”, but a “process” – one that is just as applicable to the Thames Gateway as it is to the Yangtze Delta.’ (3) Coincidentally, ‘The Edge’ was a forum established with support from the Arup Foundation and sponsored by the Carbon Trust.

Now, it seems that the process is all over, environmental commentators are having to save face without sounding too contrite. After all, they were simply taken in, weren’t they? Journalist Fred Pearce sums up the situation: ‘We all wasted our time; burned carbon flying to Shanghai to relay a false prospectus to the world. If I sound bitter, I am. This time, I was a personal victim of greenwash.’

It wasn’t his fault, of course. After all, given that this project was promoted for its environmental credentials, why on earth would a journalist of Pearce’s standing ever have questioned anything? His role was simply to visit and throw garlands. He is suitably annoyed that – on finding that the Emperor has no clothes – he wants to portray himself as being ‘hoodwinked’ by an elaborate deception. ‘Shanghai’, he says ‘milked the media well’ (4).

But Dongtan is not alone. In 2005, environmental architect and author of Cradle to Cradle, Bill McDonough, started building his eco-village project in China, at Huangbaiyu in Liaoning Province. Local commentators have pointed out that to clear the site, productive arable land was bulldozed, resulting in no harvest for four years. Anthropologist Shannon May reported at the time: ‘While the shells were completed, there were significant problems with the function of the houses: there was no electricity, no water, no gas. The houses have essentially remained in this state through the end of 2008… the promise of a model ecological development in Huangbaiyu never came to pass.’

McDonough has distanced his company from the failures, suggesting that they should have ‘managed… unrealistically high expectations built up’ by the various design teams and stakeholders. What McDonough doesn’t admit is that, actually, low-tech housing processes were anathema to the desires of the local people. They wanted speedy, well-built, solid housing, especially since the ‘sustainable’ versions ended up costing $20,000 each. Wired magazine recently suggested that the local dignitaries had only bought into the idea because they thought that it would bring the promise of eco-investment. When they found out that they were building mud-houses for no financial gain, they reverted to the speedier concrete methods of construction.

There is a growing interpretation that the failures of these eco-cities are a consequence of them being too ambitious. The opposite is true. China is a rapidly developing country with massive areas of underdevelopment. To raise such regions out of penury, improve housing and increase productive employment, development needs to be urgent, rapid and, in many instances, wilful. A look at Britain’s historic infrastructural ambition may serve to exemplify the point.

In the UK, we have got used to the sight of mile after mile of pylon steelwork marching across otherwise unspoiled countryside. However, many of us realise that the optimal way that the national grid could, maybe should, have been created is with underground supply lines, which would have been less visually intrusive, less prone to weather damage, and with possibly fewer maintenance problems. But at the time, the ambition was to deliver power to every home in the country, as quickly as possible. At the time, the Electricity Supply Act of 1926 was ‘projective rather than reactive and did more than any other piece of legislation between the wars to provide effective industrial structures’ (5). Speed was of the essence and while there were protracted disputes about the citing of pylons, the nationalised Central Electricity Board won people over by ‘associat[ing] electricity with the idea of modernity’ (6). A similar process is at play in China.

Admittedly, China’s State Council has complained that energy-intensive industries are developing too quickly and preventing China from reaching its energy efficiency goals (7). Such sentiments are necessary to drive China’s competitiveness as well as helping to combat the widespread pollution arising from rapid industrial growth and carbon intensive industry. However, an over-concentration on environmental matters can dull the senses and our critical faculties and prevent us from seeing the bigger picture.

Dongtan, the city that was intended to be the ‘model for how to build sustainable cities worldwide’ should still provide a lesson for us all. Blindly praising its environmental credentials without recognising its squat, low-rise, parochial, carbon-fetishising, architecturally unappealing, unworkable urban eco-clichés, is a recipe for future disasters.

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